The Gordon Growth Model calculator computes the present value of a stock based on the dividend per share in year one (D1), the required growth rate (k), and the growth rates in dividends (g).
INSTRUCTIONS: Choose the preferred units and enter the following:
Gordon Growth Model (VoS): The calculator returns the present value of the stock in U.S. dollars. However, this can be automatically converted to other currencies via the pull-down menu.
The Gordon growth model is used to determine the intrinsic value of a stock based on a future series of dividends that grow at a constant rate. Given a dividend per share that is payable in one year, and the assumption the dividend grows at a constant rate in perpetuity, the model solves for the present value of the infinite series of future dividends.
The formula for the Gordon Growth Model is:
VoS = D1/(k - g)
where:
Source: Gordon Growth Model Definition | Investopedia http://www.investopedia.com/terms/g/gordongrowthmodel.asp#ixzz4AWojyp37